Charging for public health services could help save the health system

There’s been a lot of talk recently about the importance of “price signals” for health services that the community has come to regard as typically “free”.

The idea is that if we charge people a small “co-payment” for emergency services or bulk-billed GP visits (say around $5-$6 a visit) then this gives signals to the community that these services cost money to provide.

It helps to reinforce the fact that funding for healthcare is not underpinned by a bottomless pit of money. Even the Federal Health Minister now concedes that our health system is in dire need of pragmatic cost saving solutions to keep it in working order.

So far we have seen cuts to government support for private health insurance (e.g. cuts to rebates) and government benefits are heavily means tested (in an effort to make our health system sustainable) but there are limited restrictions on the supply side. Specialists still charge what they want.

In any case, it is now time to turn our attention to some cost saving solutions for the seemingly “free” public health services.

Westfund has argued for some time that there are benefits in restricting free public health services. We genuinely believe that one way to get our health system back on track is to adopt solutions that help limit demand for “free” public services. This could be a system of means testing or a co-payment as seems to be on the table now.

We could also look at allowing health funds to cover some public health service costs (like GP visits) as a tactic for reducing the burden on the Medicare system.

Over the past two decades, economic growth has allowed us to expand health services. It is this increase in the amount of services (rather than other factors such as ageing and technological improvements) that is inflating our health budget.

The truth is we cannot continue to complain about the rising cost of health and not be prepared to pay for some of these services in some way.

If the co-payment proposal is refined (especially making some concession for low-income families, pensioners, people with chronic illnesses and disadvantaged individuals) and implemented it could lead to hundreds of millions of dollars savings to the health expenditure. This would be achieved by the reduction of unnecessary doctor visits and limitations around access to free public health services and it would also encourage people to value the services they use.

I really do agree it is time that we looked at restricting the demand for “free” health services via a “price signal” or some other mechanism.

I think that is a far better option than continuing to watch the health system crumble before our eyes.

Grahame Danaher, CEO of Westfund Health Insurance